The Illinois legislature in Springfield has passed Mayor Rahm Emanuel's pension fix plan for Chicago and delivered it to Gov. Pat Quinn to sign.
Quinn still has yet to take any action for or against the pension plan from Emanuel, a fellow Democrat. But the governor does have a different plan on alleviating the pension crisis in Chicago.
Quinn has been hesitant to support Emanuel's plan because of its reliance on raising property taxes in Chicago. Even though Emanuel stripped the original language out of the bill, it would still allow for the Chicago City Council to pass a property tax increase. Since Quinn talked about lowering property taxes in his budget address as a way to ease the burden of making the income tax hike permanent, it makes sense for the governor to oppose any measure that would increase property taxes anywhere.
That's why Quinn said he's open to opening up the state spigot of increased tax revenue to Chicago and other municipalities to help fix the pension crises.
Reports Natasha Korecki from the Chicago Sun-Times:
Quinn and Chicago Mayor Rahm Emanuel have butted heads on the issue over the last several weeks, with Quinn forcing Emanuel to strip property tax language from a state bill to give the city greater authority over public employee union contracts. The bill, which is now silent on property taxes, was passed and awaits Quinn. Quinn would not say on Monday whether he would veto it or sign it.
Quinn said a plan to designate more state income tax revenue toward local governments would work through his budget proposal, which called for an extension of an income tax hike from 3.5 percent to 5 percent - as well as a $500 property tax rebate.
'I believe in that. I think that's a good way to help local units of government and the school districts to some extent reduce their reliance on property taxes,' Quinn said. 'That has to be one of our foremost missions in Illinois. The property tax collects more money every year than the income tax and sales tax combined. I want to reduce our property taxes.'
Chicago is far from the only municipality in need of a pension fix, and Quinn recognizes that. But there is one possible flaw in Quinn's plan, and Chicago Tribune reporter Monique Garcia points that out:
Quinn's spending proposal relies on legislators making the temporary income tax increase he signed into law permanent. Portions of the tax are set to expire starting in January.
'I think it's really important that we use the opportunity of the next 30 days or so to really say if we want to help our local units of government, what's the best way to do it?' Quinn said. 'If we have more revenue sharing from the income tax, I'm definitely willing to engage in that discussion... Don't you think that's a better way to go than to say to local units of government that the only alternative you have, the only resort, is to raise property taxes?'
While municipalities around the state are looking for a pension fix, public universities in Illinois are trying to cope with a flaw in the pension bill passed last December that has resulted in a rash of retirements of public university employees.
Chicago Tribune reporter Jodi S. Cohen has more:
However, the [pension] law also includes a mistake in wording that will affect some public university employees in an unintended way and is contributing to a surge in planned retirements at campuses across the state. The error, tied to just one of the retirement plans, would calculate an employee's benefits as of last year instead of this year, leading to a more significant reduction than intended.
Here's how the mistake happened: The law had intended to lock in the minimum annuity that retirement-eligible employees would be eligible to receive based on the date of June 30, 2014, even if they retire months or years later when new pension rules would apply, including provisions that would reduce the amount of interest. However, the law's wording set the date to a year earlier, in 2013, meaning that a year's worth of pension contributions and interest would be eliminated.
That mistake is driving people to retire prior to the law taking effect to avoid having their benefits revert to the 2013 level - a difference of hundreds of dollars a month or thousands of dollars a year for some employees.
The whole issue revolves around the dire need for pension reform in Chicago. The city isn't as bad as Detroit yet, but is it heading down that road?Brendan Bond is an editorial assistant at Reboot Illinois. He is a graduate of Loyola University, where he majored in journalism. Brendan takes a look each day at the Land of Lincoln Lowdown and it's often pretty low. He examines the property tax rates that drive Illinoisans insane. You can find Reboot on Facebook and on Twitter @rebootillinois.